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Natural gas spot price & storage review – Jan 7

January 7, 2011

The EIA issued its weekly report on natural gas, after a two week vacation due to the holidays. The report is pertaining to the final week of 2010, December 30th, and updates on natural gas spot price, storage and consumption. So let’s get started:

The EIA report presents an interesting picture in regards to the demand of natural gas in the U.S. in the passing week:

First, there is a rise in consumption and an ease in production: according to their estimates, the domestic consumption has risen by over 7.5% compare to the previous week, mostly due to increase in demand for residential and industrial markets;

Second, there has been a colder weather in the U.S., mainly in the Northeast; the average U.S. temperatures were slightly colder than normal with a weekly average of 33.6 degrees – 0.7 degrees below normal.

As a result, Natural gas spot price (Henry Hub) rose last week compare to its previous week by over 8% reaching 4.52 USD/MMBTU a rise of 33 cent per MMBTU, in which the Northeast has led the charge with an 11% increase or 0.51 USD/MMBTU.

Nonetheless, there is one point worth mentioning and it is that the natural gas consumption is still below the consumption level compare to the same period last year by over 14.6%.

This could explain why the natural gas spot price was lower last week than it was in the parallel time last year.

In my last review about U.S. Natural gas storage, there was a drop in Natural gas underground storage (Billion Cubic Feet) of 4%; in the recent published figures for the week of 30th of December there was a similar decline of 4.2%, which is a decline of over 135 Billion cubic feet.

For this report’s figures, the Natural gas storage reached a total of 3,097 (Billion Cubic Feet) for all lower 48 states.